General Electric buys Alstom energy unit for $17bn

General Electric has been given the green light to buy Alstom’s energy business for an estimated $17 billion. The deal will give GE wider access to power plants in Asia and Africa, with Alstom getting a stronger footing in the US railroad business.

To facilitate the deal, the French government agreed to purchase
a stake in the manufacturing company from Alstom's leading
shareholder, Bouygues. The agreement cleared way for the American
giant to complete its acquisition of the French firm’s energy
unit.

The French government will purchase as much as 20 percent of
Alstom shares from Bouygues at a future date, with the option
lasting for 20 months after the GE-Alstom deal closes. The French
state will receive the decision making power in Alstom's board
immediately after the agreement is signed, removing the final
hurdle from GE's pursuit of Alstom's core energy assets.

Government control of private transactions is granted in France
according to the policy adopted after World War II. The practice
aims to prevent job losses in the country's companies and the
relocation of production abroad.

The French government warned earlier it wouldn't sign off on GE's
acquisition until it bought most of Bouygues's Alstom stake.
French Industrial Renewal Minister Arnaud Montebourg told French
TV that the government would purchase the stake when Alstom
shares were trading lowest on the stock market.

The US company will acquire Alstom's gas-turbine business, which
is the largest part of the company's power-equipment unit. GE
will get larger access to coal-fired plants in many regions,
including China and Africa, where such power systems are widely
used.

After the deal, Alstom – which also makes France's high-speed TGV
trains – will buy GE's train-signaling business to merge it with
its own train business, on which the French firm plans to focus
in the future.

Originally the American corporation offered $13 billion, but the
French government blocked the deal. GE also competed with Siemens
and Mitsubishi to get the share.